External Environment Analysis of Coca-Cola

Executive SummaryIn this section of the company analysis we will be examining several of the external factors present in the Coca-Cola Company’s environment. We will conduct a Porter’s 5-forces analysis, a PEST analysis which will include a look at political, economic, social, and technological factors, and will show how the Coca-Cola Company has a solid grasp on its place in the market along with its major competitor.

Porter 5-Forces AnalysisThreat of New Entrants (low threat): This threat is quite low in the soft drink manufacturing industry as the cost of entry is very prohibitive. Coca-Cola has the financial means to snuff out nearly any attempt by a new company to enter the market, and Pepsi-Cola – their largest competitor - would quickly team up with Coca-Cola to help with that effort.

Both companies have invested hundreds of millions of dollars over the years to create brand loyalty, and both have made huge strides around the world, gaining millions of new customers outside of the United States. (Manta, Inc., 2012)

Most new entrants would find it difficult to provide significant enough margins to retailers. If a new entrant began gaining ground, Coca-Cola could simply raise margins enough to buy all of the available shelf space until the new entrant was out of business. If the product were viable enough, Coca-Cola has more than enough financial means to purchase the newcomer and the rights to its product line.

Bargaining Power of Suppliers (low threat): There are a large number of suppliers for the ingredients that go into Coca-Cola’s products, and those commodities are inexpensive. Coloring, sugar, high-fructose corn syrup, caramel color,...